Subsidised bus services throughout Tyne and Wear could face the axe as council transport chiefs eye a £7m black hole after a bid to ‘re-regulate’ buses hit the buffer.

Free/discounted travel for children and disabled people on buses could also fall victim to cutbacks by Nexus after the body responsible for transport, the North East Combined Authority, failed in its bid to take control of bus fares and services.

The Quality Contract Scheme (QCS) was projected to bring in £5m and would have allowed Nexus to preserve the current service, but after an independent board ruled against the bid swingeing cuts now appear unavoidable.

The bid itself cost the public purse £2.5m and now there is forecast to be a £7m deficit in Nexus’ budget. Transport chiefs are to launch a strategic review of services.

A Nexus spokesman said: “We are preparing for a strategic review of local transport we provide in Tyne and Wear which will identify options for reductions in service budgets from 2017.

“We know how strongly people value the services we provide using local authority subsidy, and there will be thorough consultation before we make any recommendations.”

Pensioners would still get free travel and disabled people’s passes for buses after 9:30am on weekdays, weekends and bank holidays would not be affected, said Nexus.

Since 2010, Nexus’ transport levies have been cut by £13m and one in five staff lost their job. Nexus has already dipped into reserves to avoid cuts.

At a meeting of NECA’s Transport Committee, Durham councillor Neil Foster said it was better to map out cuts now than wait to see if the QCS could be resurrected as delaying risked creating a “crisis”.

“The longer you put it off the harder the crash you are going to have,” said Coun Foster.

Referring to £400,000 of cuts to bus subsidies that Durham County Council has made, he said: “It is better to take difficult decisions early and then plan in advance, even if you get criticised for it.

“You have to give people an opportunity to be engaged in the process as we make what could be some very difficult decisions. We reach crisis point if you then have to be rushed into decisions in 2017.”

The backdrop, however, is that the transport budgets across the NECA area - which spans Northumberland to County Durham - could soon be integrated into one pot as the North East devolution deal is implemented.

The transport budget for Tyne and Wear was suffering more in comparison to other areas’, a budget report by Paul Woods, NECA’s chief finance officer, revealed.

While Durham was set to lose £735,000 in 2016/17, with the bus network set to remain stable, Northumberland was set to see an increase of £258,000.

Mr Woods said discussions on integrating transport budgets were going on “behind the scenes”.

His report also warned that bus patronage was falling. It reads: “Without the possibility of generating £5m of savings from implementing the Bus Quality Contracts Scheme in 2017/18, and having had its grant from the NECA reduced by £2m in 2016/17, Nexus’ budget deficit will grow to an estimated £7m in 2017/18, if action to address the budget imbalance is not taken.”